|Use your home equity to finance college expenses such as tuition, housing and other expenses as needed.
Your best option is using the bank equity program: see demo
Equity Line of Credit
like a credit line:
- You will receive special "equity" checks
that that can be used to advance yourself a loan up
to your approved available balance. Simply write the
loan amount you need.
Some lenders will also provide credit
card-like access to your equity line account:
- You can use it like a credit card, which all transactions
will be posted to your equity line account.
- We note a word of caution. Even though your account
is protected against fraudulent use, the last thing
you need is having your home exposed to potential
fraud in the event you lose your card or someone obtains
access to your card numbers.
- We recommend that you use the special "equity"
checks to access your equity line account. Keep and
protect them in your home. Never carry these checks
- When you need to access your account, write the
loan amount you need with your "equity"
check and deposit it in your bank checking or money
account. Then use the debit or check card that came
with your money account to charge transactions at
retail and other establishments.
- Another money management option is to use pre-paid
credit to fund your child's education: see
Equity line rates are variable and indexed
to the PRIME RATE or some other rate index:
- This means your rate can increase or decrease whenever
the PRIME RATE changes. The rate (APR) is calculated
by taking an margin (percentage) and adding it to
the PRIME RATE.
- Whenever the PRIME RATE increases, your monthly
payment due will likewise increase. Whenever the PRIME
RATE decreases, your monthly payment due will likewise
- The interest (APR) that will be charged to your
account will be only on the amount you actually use,
not on the total amount of your credit line.
- If the lending institution uses an index other than
the "PRIME RATE ", request to view historical
changes for the index rate being used. Compare this
trend against the historical
trends for the "PRIME RATE" to note
frequency changes in APR and how high the rate has
- All home equity line accounts must list the rate
cap for the account. This cap may vary by state.
Minimum payment terms for home equity
lines may include one of the following plans:
- interest only plus any penalty-related fees,
- percentage of the principal plus interest and any
Note: any principal repayment will not reduce your
balance to zero at the time your line account closes.
You must pay an additional amount to reduce your balance
to zero over a repayment term. Use
this payment calculator to estimate payments.
- These repayment terms may vary by lender. You should
be able to pay down your equity line account at any
time without prepayment penalties. If no, find another
With most credit line programs, you
can advance yourself a loan as many times as your like, as long as the advance does not exceed your approved
- The advance feature is usually available for 5-10
years at most lending institutions, at which time
you may renew your equity line option, payoff the
loan amount, or convert your equity line balance over
to a fixed rate equity loan amortized at repayment
terms set by the lender.
- Again, these terms may differ by lender. Some lenders
do not offer a renewable feature or allow conversion
of the equity line balance over to fixed-rate amortized
Please review the terms before making your final decision.
The home equity loan is a fixed rate loan:
- The money is advanced to you when you close your
- This advance is a one-time loan, with no further
advances made on your account.
Equity loan rates are fixed and set by
- The rate will not go up or down during the repayment
period of the loan.
Your monthly payments are fixed:
- The amount and number of payments depend on the
repayment terms of your loan. Lenders offer a range
of repayment terms, generally from 5-20 years.
You may payoff your equity loan
at any time:
- You need to check the lender's prepayment terms.
Some lenders will charge a prepayment penalty under
Much Can You Borrow
approved available equity line or loan balance is secured
by the equity in your home:
- The total amount approved depends on your LTV position.
- These amounts are determined by taking a percentage
of the appraised value of your home and subtracting
the balance owed on the existing mortgage.
- For example:
Let's say that your home has an estimated market value
of $150,000. The amount that you still owe on your
first mortgage and any other liens is $100,000. The
maximum amount you can borrow is calculated as follows:
your own LTV borrowing amount
of Market Value:
of Market Value: